When you find yourself in a deluge of debt, it feels as if nothing will ever change for the better. But believe it or not, you do have options, one of them being debt relief programs. However, there are multiple forms of debt relief, including debt settlement, debt consolidation, and bankruptcy.
What are the consequences of various debt relief options?
Let’s take a look.
What Is Debt Relief?
As we say, there are various kinds of debt relief programs. And, while they’re all different, what they have in common is the ability to relieve you of financial obligation. Debt relief can also be helpful for those who need cash flow management or have been laid off and are looking for an opportunity to get back on their feet again. The nature of this relief will vary depending on the type of assistance offered, but options include debt settlement, credit counseling, loan forgiveness and other types of assistance.
5 Things to Consider Before Choosing Debt Relief Services
According to the experts from FreedomDebtRelief.com, there are certain things to consider before choosing to enter a debt relief program.
Among these are:
1. What are your personal financial goals?
2. Are you trying to pay off your debt, or have you already paid it off?
3. How much do you owe?
4. Will they help with the collection agency process?
5. Is this is going to be the only relief service you use in the future, or will it be part of more than one program?
What Are the Options for Debt Relief?
When you default on your loan or owe a significant amount of debt, you might think that your options are limited. When you’re in debt and considering whether to take a loan against your home or sell it and use the proceeds as part of your debt repayment plan, there are some types of relief options to consider: loans, settling your debts, and bankruptcy.
Let’s review your options:
- Debt consolidation. You can consolidate various debts into one loan with the same lender with a lower interest rate.
- Credit counseling. Credit counseling services can help to improve your credit score and reduce the amount of debt you owe in a shorter period.
- Pay down your debts using extra money. You may have some extra cash lying around that you can pay down your debts.
- Collecting refunds from companies who owe you money. If you have an outstanding debt from a company that owes you money, it can be helpful to contact them and ask them about their refund policies.
- Take out a loan. You will be required to pay interest on the loan for a certain number of years before you fully pay the loan off. If you clear the debt in less than five years and interest rates are low enough for it to be worth it, then this could be an option worth exploring.
- Credit card balance transfer. Transfer your balance from one credit card to another for lower interest rates and avoid paying interest charges on top-up balances or cash advances.
- Bankruptcy. It can be an option if you have a lot of consumer debt but want to avoid the consequences of weakened credit scores. Keep in mind that bankruptcy can stay on your reports for up to 10 years.
- Get debt forgiven. Like consolidation, some people offer forgiveness of their debts if they agree to repay them in less time.
- Negotiation. In this case, the creditor agrees to reduce the amount you owe them and do not file a lawsuit against you.
Benefits of Debt Relief
Here are some advantages you gain by getting out of debt:
- Financial freedom
- Debt satisfaction
- Good financial health
- More cash for spending on and with family and friends
- More access to education
- Improved mental and emotional health
- A decreased chance of bankruptcy
- More time and energy to pursue passions and dreams.
Now that you know your options and the consequences of debt relief, you can size up your financial situation and figure out which of them is the best option for you.